BALANCE SHEET
&
RATIO ANALYSIS
Q.1)Liability side of the
Balance Sheet represents?
Ans)Sources of Fund
Q.2)Assets side of Balance
sheet represents?
Ans:Uses of Funds
Q.3) What are Long term
Liabilities?
Ans: Liabilities which we
have to pay in long term i.e.
beyond 12 months
Q.4) What is a contingency?
Ans:An existing situation where uncertainty
exists as to possible gain or loss that will be
resolved when one or more future events occur or
fail to occur
Q.5) What is contingent
liability?
Ans: Liability which occur as the
result of a loss contingency.
Q.6)What are current liabilities?
Ans: Liabilities which we have to
pay in short term i.e within 12
months
Q.7) What is Capital/Share Capital?
Ans:Capital is the money invested by
the owners,promoters or the public
in a firm or a company.
Q.8) What is a Current Asset?
Ans) Anything that is expected to
be converted into cash or
consumed by the business within
one year from the date of the
balance sheet .
Q.9) What is Non Current Asset?
Ans) Anything that is not expected
to be converted into cash or
consumed by the business within
one year from the date of the
balance sheet.
Q.10) What is Fixed Asset?
Ans) Assets which are of relatively
permanent nature and they are not
disposed off within short period.
They are carried from year to year
and put to use.
Q.11) What are Intangible Assets?
Ans) Certain Assets in business don’t have any
physical presence or in other words these are
just book entries with certain specific
objectives. In order to account for the cost
incurred on such expenses ,they are shown as
assets in the book.
Q.12) Credit Balance in Balance
sheet is shown as?
Ans) Liability
Q.13) Debit balance in
Balance sheet is shown as?
Ans) Asset
Q14. A Balance Sheet gives the
financial position of unit?
Ans. As on particular date
Q.15) What is Net Worth?
Ans) Net Worth is the sum of Paid up
Capital and Reserve and Surplus
Q.16) What are Long
term Sources of Funds?
Ans) Net Worth and Long
term liabilities are called as
Long term Sources of
Funds.
Q.17) What are Short
term Sources of Funds?
Ans) Current Liabilities are
called as Short term Sources of
Funds.
Q.18) What are outside
liabilities?
Ans)Long Term Liabilities
and Short Term liabilities
are called as outside
liabilities.
Q.19) If the increase in
long term uses is higher
than the long term sources,
then what will be effect on
Net Working Capital?
Ans) Net Working Capital
will reduces
Q.20) What are short term
uses of funds?
Ans) Current Assets are
called as short term uses of
Funds.
Q.21)What are Long term
uses of Funds?
Ans)Assets other than Current
Assets are called as Long
term uses of Funds.
Q.22) What are Examples of Current
Liabilities?
Ans) Short Term borrowing from
Banks(CC/OD),Unsecured loans
payable within 12 months,Sundry
Creditors, Statutory
libilities(provision for taxation,
sales tax etc),Miscellaneous
current liability(provision for
dividend,bonus etc)
Q.23) What are examples are Current Assets?
Ans) Cash ,bank Balance, Inventory(Raw Material,
Stock in Process, Finished goods),Receivables,Pre
paid Expenses, Advances for purchase of raw
materials, components and consumable spares and
other advances.
Q.24) What are examples of Non
Current Assets?
Ans) Investment in Long Term loans to
sister or associate firms,Investment in non
marketable securities long and advances
of long term nature.
Q.25) What are example of Intangible
Assets?
Ans)Goodwill,Patents,Copyrights,
Trademarks, Preliminary/
Preoperative expenses.
Q.26)What are examples of
Long Term Liabilities?
Ans) Debentures,Term loans
raised from banks and financial
institutions for long term.
Q.27) What is Quasi equity ?
Ans)Though legally it is reflecting as a liability in the
books of the business enterprises this is a good as part
of equity from the point of view of the lending bank if
Principal & Interest both are repaid after the closure of
the bank’s loan then it will be treated as Equity else it
will be consider as Loan.
Q.28) Accumulated
depreciation is classified on
a balance sheet as a(n)
Ans). Contra asset to Property
and Equipment.
Q.29) Contributed capital is
classified on a corporation's
balance sheet as
Ans) A shareholders' equity
account
Q.30) Allowance for Doubtful
Accounts is classified on the
balance sheet as a(n)
Ans) Current asset.
Q.31) How Many types of
Capital are there in Case of a
Company?
Ans) Four Authorised,
Subscribed, Issued & Paid Up
Q.32)What is difference between
Reserve and Surplus?
Ans) Reserve consists of the
portion of earnings, receipts or
other surplus of an enterprises
kept aside by the management for
a general or specific purpose.
Surplus represents credit
Q.33)What is Tangible Net Worth?
Ans) If we Deduct Intangible
Assets from Net Worth, we will get
Tangible Net Worth.
Q.34)What is Net Working
Capital(NWC)/Net Current Asset
Ans: (Current Assets - Current
Libilities) or Long Term
Sources(LTS)-Long Term
Uses(LTU)
Q.35)What is Working Capital
Gap?
Ans) Current Assets-Current
Liabilities(Other than Bank
Borrowing)
Q.36)What is Cost Of Sales in P&L
Statements?
Ans) Cost of Sales represents cost of
production plus opening finished
goods’ stock minus closing finished
goods’ stock.
Q.37) Loss is classified
Ans Intangible Asset
Q.38) What is Cost Of Production in P& L Statements?
Ans)Cost of Production is the cost comprising
opening stock of stock in process less closing stock in
process plus cost of raw material consumed ,store and
spare consumed,power and Fuel direct labour ,repair and
maintenance,other manufacturing expenses and
depreciations.
Q.39) Profit will become
a part of_?
Ans) Net Worth under the head reserves.
Q.40) What is Raw
Material Consumption?
Ans) RM Consumption represents raw
material purchased plus opening raw
material stock minus closing raw
material stocks.
Q.41)What is Net Sale?
Ans)Net Sales are Gross
Sales minus returns,dicounts
Excise duty.
Q.42) What is Gross Working
Capital Called as?
Ans)Total Current Asset
Q.43)What is Net Owned
Funds?
Ans) Net Owned Funds or Tangible
net worth are the funds representing
paid up capital free reserves,capital
reserves reduced by accumlated loss
and Intangible Assets
Q.44)Current Ratio is____
Ans) Current Assets/ Current Liability
Q.45) Quick Ratio ______
Ans: (Current Asset-Stock)/(Current Liability)
Q.46) What is Debt Equity Ratio?
Ans :Long Term Outside liabilities/ Tangible Net Worth
Q.47) What is TOL/ANW ratio?
Ans) (Long Term Debt+ Current
Liability/ TNW-Investment in Sister
Concern)
Q.48) What is Asset
Coverage Ratio?
Ans: Total Value of Security/
Aggregated Funded Limit .
Q.49) What is Interest Coverage Ratio?
Ans :EBIT(Earnings Before Interest & Tax)
/Interest
Q.50) What is Fixed Asset Coverage Ratio?
Ans:Net Block(Capitalized & WIP)/Long Term Debt
Q.51) Raw Material holding period is
calculated as
Ans)Average Stock of Raw materials*12m/
Cost of Raw material consumed
Q.52) Stock in process holding
period is calculated as
Ans) Average stock in process *12m / cost of
Production
Q.53)Finished Goods holding period is
calculated as?
Ans) Average stock of finished goods *12m/ cost of
sales
Q.54) Debtor’s velocity
is calculated as?
Ans) Average sundry debtors*12m/Sales
Q.55)Creditor’s velocity
is calculated as
Ans)Average sundry creditors*12m/
Credit purchase
Q.56) What is Fixed Asset
Turnover
Ans)Sales/Fixed Asset
Q.57)What is Debtor’s turnover
Ans): Sales/Average debtors
Q.58)What is Inventory Turnover
Ans) Net Sales/Average Stocks
Q.59)Cash generation is calculated as
Ans)Net Profit+Depreciation+other
non cash expenditure
Q.60)Debt service coverage ratio is
calculated as
Ans) Net Profit +Depreciation+Interest on
Term Loan)/ (Installment of Term
loan+interest on Term Loan)
Q.61) What is Net Profit
Ratio
Ans) Net Profit/Sales*100
Q.62) What is operating
Profit ratio
Ans)Operating Profit/Sales *100
Q.63)What is Gross Profit Ratio?
Ans) Gross Profit/Net Sale* 100
Q.64)What is the classification of unsecured loan in Balance Sheet?
Ans:)Unsecured loan is treated as Quasi equity if the loan is not
to be repayable within the tenor of Bank Loan and the loan is
interest free or if a company pays interest on such loan, the rate
of interest on such loan should not exceed the rate of interest
paid on Bank Loan.
Q.65) Given that current liabilities are
at Rs. 300,000, current ratio is 3:1 and
quick ratio is 1:1, the value of stock
will be
Ans: Rs. 600,000
Q.66) Current Ratio is 4:1.Net Working
Capital is Rs.30000,What is Current Asset
Ans)40000
Q.67) Current Ratio is 2:5 .Current Liability
is Rs.30000.The Net Working Capital is
Ans: -18000
Q.68) The closing Stock of Raw Material is
Rs.50lacs which is double the amount of Opening
stock.Raw Material purchased during the year is
Rs.120 lacs.What is Raw Material Consumed?
Ans:95
Q.69) Opening Stock of Raw Material Is
Rs.30 Lacs,closing Stock is
Rs.50lacs.Annual purchase is Rs.500
lacs.What is the Average period of holding
of Raw Material.
Ans: 1 months
Q.70) Annual Sale of Unit is
2.5lacs.Excise duty during the year is
Rs.50000.Average Stock is
50000.Calculate stock turnover ratio is
Ans : 4
Q.71) Given that fixed assets are at Rs.
600,000 current assets Rs. 400,000 share
capital Rs. 500,000, Term liabilities Rs.
2,50,000, Current liabilities Rs. 2,50,000, the
solvency ratio will be
Ans: 20%
Q.72)The Total liabilities of a firm are
50,its long term uses are 20 and long
term sources 30.What is Current asset
and Current liability.
Ans:CA=30 ,CL=20
Q.73) A joint Stock company’s total assets
are Rs.45Cr which include intangible assets
worth Rs.2Cr .Its liabilities other than Share
capital and reserves are Rs.40Cr.What is the
amount of Tangible Net Worth?
Ans:3Cr
Q.74) As per the Balance Sheet of a
firm the Current ratio works out to
be 2:1 and the net working capital at
Rs.50000.What will be amount of
Current liabilities?
Ans:Rs.50000
Q.75)The Current ratio of a firm is 1.5:1 and
its tangible Net worth is Rs.5lacs.If the total
liabilities of the firm are Rs.30lacs and the
debt equity ratio is 3:1 ,what will be amount
of current liabilities?
Ans:Rs10lacs
Q.76) A balance Sheet shows long term
uses of funds at Rs.6lac and long term
sources of funds at Rs.8lac.What is the
Net Working Capital?
Ans:Rs.2lac
Q.77) The Balance Sheet of a firm has
shown total assets of Rs.20lacs.The long
term uses are Rs.11 lacs and current
ratio 1.5:1.What is the amount of Current
liabilities.
Rs.6lac
Q.78)Debt equity ratio is
3:1.Firm’s long term
liabilities are 90 and
amount of Intangible Assets
5.What is Net Worth
Ans) 35
Q.79)In a balance sheet amount
of total assets is Rs.10 lac,current
liability Rs.5lacs and capital and
Reserves Rs.2lac.What is the Debt
Equity ratio
Ans:1.5:1
Q.80) If long Term
Sources are 40 and debt
equity ratio is 3:1.if there
are no Intangible Assets
,the Net Worth is
Ans:10
Q.81) A firm has net profit of
Rs.20lac,depreciation Rs.5lac ,annual
interest payable on long term liabilities
Rs.5lac and annual Installment of the long
term liabilities is Rs.10lac.What is DSCR?
Ans:2
Q.82)Total liabilities of a firm are
Rs.80lac and current ratio 1.5:1 .If its
fixed assets and assets other than
current assets are Rs.50lacs and debt
equity ratio is 3:1,what is the amount
of long term liabilities?
Ans:Rs.45lac
Q.83)A firm has sales of Rs.200lac.Its
average stocks are Rs.40lac.The Stock
turnover ratio is :
Ans) 5 times
Q.84) A company has average book
debts of Rs.15lacs and its sales are
Rs.180lacs what is the debtor
velocity ratio?
Ans) 1months
Q.85)A firm has 3months’s debt
collection period. Its Sales are Rs.180
lacs .What is amount of average book
debts:
Ans) Rs.45lacs
Q.86)A company has net worth
Rs.5lacs,Term Liability
Rs.10lacs.Fixed Assets Rs.16lacs and
Current Assets Rs.25lacs.There is no
intangible Assets or ONCA.Calculate
Ans) -1lacs
NWC
Q.87 Liabilities Assets
Capital 180 Net Fixed Asset 400
Reserves 20 Inventories 150
Term Loan 300 Cash 50
Bank CC 200 Receivables 150
Trade Creditor 50 Goodwill 50
Provisions 50
800
800
Calculate Net worth, TNW, NWC, Current Ratio,TOL/TNW
NW=200, TNW=150, NWC=50, CURRENT RATIO=1.17:1,
TOL/TNW=4
Q.88)Authorised capital of a company is Rs.5lac.
40% of Authorised Capital is paid up .Loss incurred
during the year is 50000.Accumulated loss carried
from last year is Rs 2lacs.Calculate the TNW of
company
Ans) -50000
Q.89) Suppose a hotel has Rs. 40,000 of longterm
debt at year end. Of this amount,
Rs.10,000 must be repaid within the next
year.Then what is long term debt under long term
liabilities in the classified balance sheet?
Ans) Rs.30000/-
Q.90) A firm has Capital Rs.12lac,Reserves Rs.4lac
Unsecured Loan Rs.5lacs,Current Asset
Rs.16lacs,preoperative expenses Rs.2lacs.What is
Net Worth?
Ans) Rs.16lac
Q.91) What is the maximum amount of unsecured
loan that can be treated as quasi capital?
Ans) 100% of Tangible Net Worth
Q.92)Fixed Asset and non current assets are
Rs.2lac and the bank borrowing Rs.1lac .The
total liabilities is Rs.5lac out of which the
other current liabilities are Rs.1lac.The
Working Capital Gap is Rs.
Ans:Rs.2lac
Q.93) If the Net Working
Capital of a Concern is NIL.
Its Current Ratio is
Ans) 1
Q.94) If a Current Ratio is
of a firm is very High.It
reflects
Ans) High Efficiency and
high liquidity
Q.95) Diversion of Fund
means?
Ans Use of Current liability for Long
term Uses.
Q.96)A FDR of a firm has
been lien marked in CC
limit. You will classify the
FDR as
Ans) Non Current Asset
Q.97)What is Gross
Profit?
Ans) Gross profit is Net
Sale less cost of sale.
Q.98) What is Operating
Profit?
Ans) Gross profit less
operating expenses
Q.99)What is Tangible
Assets?
Ans) Total Assets less
Intangible assets
Q.100)What are Quick
Assets?
Ans:) Those Assets which
are either ready cash or
can be quickly converted
into cash.
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